South Canterbury Finance bonds snapped up

Thursday 5th February 2009

South Canterbury Finance's 8% bonds were snapped up without the need for a public pool, raising $100 million including oversubscriptions.

The finance company sold the bonds "within days of its opening" on December 2, chief financial officer Graeme Brown said. The bonds mature on October 8, 2010, with the option to extend a further 12 months should the Deposit Guarantee Scheme be extended.

The securities trade on the NZDX market, joining South Canterbury's two other exchange traded bonds.

Brown said demand for the debt "provides a further endorsement of South Canterbury Finance's sound financial position and its standing as one of the leading finance companies in New Zealand".

His comments are more than an idle boast. Profit at the South Island firm, which has a BBB- credit rating, surged 75% last financial year, helped by an asset sale and a reinvestment rate of 63.7%.

Companies ranging from insurer Tower to Fonterra Cooperative Group are tapping the market for fixed-income securities that offer a relatively attractive return as deposit rates slide and investors sit on the sidelines of equity markets.

Tower Capital this week said it may offer to sell as much as $100 million of five-year senior bonds, while Fonterra is offering $300 million of six-year bonds paying a minimum 7.75%. State-owned Meridian Energy yesterday offered to sell fixed-rate notes maturing in 18 months or less at interest rates between 5% and 5.25%.

By Jonathan Underhill

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